AT&T: The iPhone Was Good, But Not Good Enough To Hold Off A Q4 Loss

A set of quarterly results today from AT&T (NYSE: T) that underscored some of the aftershocks the carrier is feeling in the wake of its failed bid to buy T-Mobile USA. The carrier swung to a loss and failed to meet analysts’ estimates on earnings, partly down to a $4 billion charge it took for ending negotiations with Deutsche Telekom (NYSE: DT), after meeting what appeared to be insurmountable regulatory opposition to the deal.

The $4 billion charge — $3 billion in fees and $1 billion in wireless spectrum to T-Mobile USA — put a big dampener the quarter, which otherwise saw big gains in what the carrier refers to as its “growth engines”: wireless services and specifically those around smartphones; wireline data, including its U-verse TV service; and business services.

Overall revenues were $32.5 billion for the quarter, coming in above analyst estimates according to a poll from Yahoo. Excluding the charges, earnings per share were $0.42, which missed average analysts’ estimates of $0.43. The total net loss for the quarter was $6.63 billion.

iPhone juggernaut. It’s been a year since AT&T lost its exclusive grip on the iPhone in the U.S. but such is the power of the Apple (NSDQ: AAPL) brand in wireless right now, and AT&T’s continuing hold on its original iPhone customers, that the carrier nevertheless continues to get great dividends out of its association with it. AT&T said that it made 7.6 million iPhone activations for the quarter, with overall smartphone sales totaling 9.4 million devices.

AT&T didn’t spell out exactly how many iPhones it sold of those activated — and indeed some could have been bought directly from Apple unlocked. But if you assume that most would have been bought directly via AT&T, that works out to AT&T accounting for some 20 percent of the 37 million iPhones Apple sold in the last quarter, and iPhone accounting for some 80 percent of AT&T’s smartphone sales.

It also shows that despite some of the negative press that AT&T has faced over the quality of its wireless data network, it is still holding on to its customers over competitors Verizon and Sprint (NYSE: S). In its earnings earlier this week, Verizon noted that it had sold 7.7 million smartphones and seen 4.3 million iPhone activations in the quarter.

Correspondingly, AT&T said it saw a 10 percent growth in wireless revenues to $16.7 billion. Wireless data revenue growth is outstripping that of mobile revenues overall: it was $5.9 billion, up nearly 20 percent on a year ago, which AT&T says was driven by internet access, app usage and messaging.

AT&T’s fixed digital content play isn’t doing so bad, either. Revenues for its U-verse high-speed broadband and TV service were up by almost 44 percent over a year ago, and partly offset declines in DSL. Still not by enough: total revenues for wireline services were down by 1.4 percent to $14.9 billion.

AT&T does not break out tablets as an individual category and instead groups them with other non-phone “branded computing devices” like aircards. It said it had its best-ever quarter for the category, with sales of 571,000 with total subscribers now numbering 5.1 million, a rise of 70 percent.